Iraq to privatise refineries to meet fuel demand

London, April 17, 2012

Iraq is looking to gradually privatise its oil refineries and to attract investment in new plants around the country to meet the fast rising domestic demand for fuel, its deputy oil minister said on Tuesday.

Baghdad, which is boosting its oil production, is also pushing ahead with a downstream expansion to end costly fuel imports.

'We would like to see the private sector increase its role,' Deputy Oil Minister Ahmed al-Shamma said at a conference in London. 'You shouldn't have the ministry of trade buying and selling commodities; it's out of date.'

He added, 'We are looking to complete renovation of old refineries and privatise them gradually. That's the ultimate goal.'

Demand for products coming from refineries is growing fast, both internationally and at home, the deputy minister said.

'Domestic demand is increasing rapidly. People are driving around at midnight, when a few years ago there was an effective curfew at 6 p.m.'

Through improvements at existing refineries, Iraq aims to increase its capacity to 610,000 bpd by the end of 2012 from 567,000 bpd in 2011, Shamma said. Its target for next year is 750,000 bpd.

Over time, four proposed plants would add about 750,000 bpd of capacity: Kerbala, Missan and Kirkuk, each with a capacity of about 150,000 bpd, and Nassiriya, with a capacity of 300,000 bpd.

Of those four, Iraqi officials previously said Nassiriya would be the lowest priority, because it is designed to run on crude from the Nassiriya oilfield, which has yet to be developed.

Shamma said some of the products from the Nassiriya refinery would be available for export and that infrastructure was being put in place in southern Iraq to facilitate this.

'We have provided all the facilities to make it easy for investors. There are four jetties being built for jet fuel, fuel oil, gasoline and gasoil,' he said. 'There's a hurry to get refineries built.' – Reuters